From Panorama to the Upper Tribunal: Not so Exempt now
Housing, Property, Local government
Liability created to take advantage of the Housing Benefit “exempt accommodation” rules
In August 2022, a BBC Panorama investigation uncovered property sales worth more than £120m linked to one successful developer, Paul O’Rourke, and a charity, My Space Housing Solutions (“My Space”), which then claimed to use the accommodation to provide “exempt accommodation”, achieving far higher returns under the Housing Benefit (“HB”) scheme than a landlord could ever hope to achieve from the housing element of universal credit for ‘normal’ or ‘standard’ housing.
On Monday (20.04.26), the Upper Tribunal upheld the decision of the First-tier Tribunal (“F-tT”) in two test cases that the liability of My Space’s tenants to make payments to it was created to take advantage of the Housing Benefit scheme: [2026] UKUT 157 (AAC), Judge Jacobs. This means no HB was payable to any of the tenants (or, onwards, to My Space).
Background
This Case in 60 Seconds
- A 2022 BBC Panorama investigation revealed a £120m property model linked to Paul O’Rourke and My Space Housing Solutions, using “exempt accommodation” status to secure significantly higher Housing Benefit returns.
- The Upper Tribunal (April 2026) upheld earlier rulings that tenants’ rent liabilities were “contrived”- set up specifically to exploit Housing Benefit rules – meaning no benefit was payable.
- The tribunals found My Space’s model – closely tied to developer-linked companies and financial arrangements – was a fundamentally flawed, profit-driven scheme operating through a charity structure.
- The decision reinforces that local authorities can successfully challenge artificial Housing Benefit arrangements within the under-regulated exempt accommodation sector.
- Ranjit Bhose KC and Sarah Salmon represented the successful local authorities.
Middlesbrough Council and Sunderland City Council each received scores of applications for HB from My Space’s tenants. HB was claimed on the basis the accommodation was “exempt accommodation”, meaning it was “provided by … a registered charity … where that body or a person acting on its behalf also provides the claimant with care, support or supervision”.
However, the HB regulations provide that a person who is liable to make payments in respect of a dwelling is treated as if they are not liable where the liability “was created to take advantage of the housing benefit scheme”. Colloquially, this is known as “contrivance”. Where contrivance is proved, the entitlement to HB is nil. This reflects public policy.
Middlesbrough and Sunderland refused the HB claims on the basis the tenants’ liabilities were contrived. The F-tT upheld their decisions and dismissed the tenants’ (effectively My Space’s) appeals. It found that My Space’s model (and the consequential liability of its tenants under their tenancies) was a clear abuse of the HB scheme.
The Appellants appealed to the Upper Tribunal.
The appeals
At the heart of the appeals was consideration of the “model” operated by My Space. It was a model devised and administered by Paul O’Rourke, a man with an extremely close relationship with My Space, having been instrumental in setting it up, who advised it and regularly attended board meetings, whose network of companies were its “main property developer”, and some of whose companies were given interest free loans by it from time to time.
As Judge Jacobs sets out in summarising the background at [14]:
“…the owner of the properties at the relevant time was Enabling Homes Ltd…The properties were bought by one company and immediately sold to another at a huge profit. They were then let to the charity, My Space Solutions Ltd, with no break clauses and full repairing responsibilities. Mr Paul O’Rourke was involved in the companies involved and in the charity. He was also involved in a company that provided financial support for the charity; this allowed it to continue to operate when the local authorities refused the claims for housing benefit. The charity has never engaged in what might be described as usual fund raising activities. …Mr O’Rourke was controlling the actions of the companies and the charity, appearing in different roles at different times. He and his operations have been the subject of an article in Inside Housing and a Panorama programme called ‘The Housing Benefit Millionaire’. They have also been the subject of adverse decisions by the Regulator of Social Housing and an inquiry by the Charity Commission”.
Upper Tribunal
Judge Jacobs dismissed the appeals; there had been no material error of law by the F-tT. He held that given the facts found by the F-tT, there was only one judgment that it could properly make. It had been entitled to conclude this was “a fundamentally flawed scheme which is based on a charity having to have very close links to a property developer for its financial security”. There was contrivance.
Comment
Concerns have long been expressed that the exempt accommodation sector is under-regulated, and that its growth is associated with commercial investors looking to maximise returns using the higher rents permitted by the HB exempt accommodation provisions. See, for example, the October 2022 report by the Levelling Up, Housing and Communities Committee’s on Exempt Accommodation, and the Government’s June 2023 response.
In this case, My Space’s model was, as the F-tT held (as then upheld) little more than a device for a number of private entities to make large profits at the expense of the public, through the ‘front’ of a registered charity.
Whilst the decision of the Upper Tribunal does not change the law, it demonstrates that contrived schemes are legally vulnerable where local authorities interrogate arrangements rigorously, apply the contrivance test with confidence, and are prepared to defend (the inevitable) appeals.
Ranjit Bhose KC and Sarah Salmon represented the successful local authorities.
